Gold pauses ahead of key US inflation data

Gold prices traded cautiously on Monday as investors awaited the release of crucial US inflation data that could significantly influence the Federal Reserve’s monetary policy stance.

Spot gold dipped 0.13 per cent to $2,427.86 per ounce by 0352 GMT, exhibiting a narrow trading range of $10. US gold futures declined 0.3 per cent to $2,466.40.

Market participants are likely to exercise caution ahead of the data release, said Ilya Spivak, head of global macro at Tastylive.

The highly anticipated US Consumer Price Index (CPI) report, scheduled for Wednesday, is expected to show a 0.2 per cent month-on-month increase in both headline and core inflation.

Continued progress on inflation, as reflected in the upcoming CPI data, could potentially propel gold towards a retest of its all-time high, suggested IG market strategist Yeap Jun Rong.

Market expectations for a potential 50 basis point interest rate cut at the Federal Reserve’s September meeting currently stand at 54 per cent, according to the CME FedWatch Tool. Gold tends to thrive in a low-interest-rate environment.

Fed Governor Michelle Bowman tempered her typically hawkish stance on Saturday, acknowledging some “welcome” progress on inflation while emphasising that it remains “uncomfortably above” the central bank’s two per cent target.

Meanwhile, spot silver fell 0.3 per cent to $27.36 per ounce, platinum shed 0.47 per cent to $917.83, and palladium dropped 0.2 per cent to $903.48.

Attribution: Reuters